Dear MoveCenter Experts: We paid to relocate an employee to another state, and they resigned a few months later. Now we’re out that money and have to fill the position again. I’ve heard that if we Repayment Agreements, when this happens we can recoup the money we spent. Is this customary, and how do we do it?
Absolutely! Relocating an employee is expensive and it’s prudent to protect your investment. A Repayment Agreement, sometimes referred to as “golden handcuffs”, is a legally enforceable document where both parties agree if the transferee resigns (or is terminated for cause) within a set time frame, they agree to reimburse some or all of the costs the company incurred in moving them. These agreements allow employers to better protect themselves and their investments when moving employees.
A best practice is to have the transferee sign one before any relocation expenses are incurred. You’ll want to be sure that what you’re asking them to sign is reasonable. While complying with applicable state and federal laws, relocation repayment agreements must detail the repayment terms, e.g., the duration of the repayment obligation (1-2 years is typical, but longer may be appropriate for moves involving substantial costs), the amount to be repaid (flat or prorated), and the conditions that put the agreement into play (termination for cause, resignation, etc.).
All repayment agreements should be utilized fairly and consistently enforced. They should also reflect your company’s policies and culture.
Contact MoveCenter to learn more ways we can help protect your organization when you relocate employees.
